​Another World Already Exists: The Mondragon Example

Thursday, 6 April, 2017

​Yesterday, I went to a truly inspiring event about the huge Mondragon co-operative based in the Basque country. The event was hosted by The Young Foundation​ (YF) and supported by Co-operatives UK. The focus of the event was to showcase the excellent research by YF into the Mondragon model which can be found here.

YF's approach was to analyse Mondragon as a case study in social innovation. The research is very thorough and well worth reading and I was particularly struck by the following aspects:

1. Mondragon is not a single co-operative, it is a constellation of different worker-owned co-operatives that collaborate. YF describe this as an ecosystem. And it is vast and successful. It comprises more than 260 different business units with over 75,000 workers in 35 countries and has annual revenues of over Euro 12 billion (comparable to Kellogg's or Visa). It is the fourth largest employer in Spain.

2. Mondragon competes as a whole in the wider capitalist economy of the world but the co-ops within Mondragon do not compete with each other, instead they collaborate. For example, when one of its member co-ops recently ran into financial trouble, some 2,000 workers were relocated to other co-ops in the group.

3. Democracy is embedded in every aspect of Mondragon and at all levels. There is no CEO of Mondragon. The overarching body is the Mondragon Congress made up of 650 members drawn from the member co-ops. Within the constituent co-ops it is strictly one worker, one vote. Just over 80% of employees are members of Mondragon.

4. As a result of policy rooted in the democratic tradition of Mondragon, pay ratios are no greater than 1:9 between the lowest and highest paid employees. It is clear that the democratic culture embedded within Mondragon would never tolerate large pay gaps. Compare and contrast that with the UK's leading companies as shown in our recent Pay Tracker report.

​5. ​Mondragon is self-sustaining. Its investment funds come from the reinvestment of profits made within the group. Profits are also used to fund education, welfare services and local/regional development as well as employment creation. Social mission and business-success are two sides of the same coin. Mondragon state, unequivocally, that it is not possible to have one without the other.

​6. Mondragon makes a huge contribution to making the Basque country one of the most equal regions in Europe having a Gini co-efficient similar to Sweden yet with overall taxation levels at around the EU average.

​So what are the lessons for the UK? Well, the bad news is it's probably impossible to replicate the Mondragon model here as it owes its development to the circumstances of its founding and the history of the Basque region. As Ed Mayo, from Co-ops UK wryly observed, "If you've met one co-op ... you've met one co-op"​ - every co-op is unique. The better news is that there are many things to be learned from Mondragon which could translate to the UK. Co-ops UK have proposed three policies, inspired by Mondragon, to help advance the cooperative cause in the UK:

1. Learn from worker-owned business on corporate governance and pay ratios
2. Create a more inclusive economy by supporting a co-operative entrepreneurs' programme
3. Encourage worker buy-outs to ensure business retains social value as part of planned succession.

Needless to say, The Equality Trust supports all of these asks as part of our long-standing commitment to economic democracy. We look forward to working with YF and Co-ops UK to build support for any and all proposals that would make our economy look more like Mondragon and a lot less like BHS. If you want to take action right now to help move us in the right direction, please sign and share our petition calling for mandatory pay ratio disclosure - thank you.